Nestle India Share Price Drops After Bonus Issue and Poor Q1 FY26 Profits Shock Investors

Aug, 9 2025

Nestle India's Share Price Rollercoaster: Bonus Issue and Weak Q1 Shake Market

Stocks don’t usually grab this much attention in just a few hours. But Nestle India’s recent share price plunge left plenty of investors scratching their heads. The Nestle India share opened to a wild morning after the company announced a 1:1 bonus issue—meaning every shareholder gets an extra share for each one they already own—right as it reported a hit to profits in the first quarter of fiscal 2026.

The profit numbers were hard to stomach: net profit for Q1 FY26 was Rs 646.6 crore, down 13.4% from a year ago. Analysts polled expected much better—Rs 751 crore, according to Moneycontrol. Revenue rose by 5.9% to Rs 5,096.2 crore, but investors cared more about shrinking margins than modest sales growth. Once the numbers were out, the stock tumbled as much as 5% on the NSE, falling to Rs 2,325.6 and becoming the worst performer on the Nifty 50 that day.

To make matters more confusing for people watching the ticker, the bonus issue announcement came into effect at the same time. Now, a 1:1 bonus issue doesn’t actually change the value of your investment. But it does mean twice as many shares are now in the market, so the price per share drops by about half. Some social media users and Hindi news outlets started buzzing with talk about Nestle’s stock suddenly looking cheap. In reality, if you owned 10 shares before, you’d own 20 now—the value’s the same, but the number on your screen just halved.

Profit Squeeze: Why Margins Are Under Pressure

Suresh Narayanan, who’s been steering the ship as CMD, didn’t sugarcoat the problems. “Elevated consumption prices across our commodity portfolio hit our bottom line hard this quarter,” he explained. Nestle’s costs have jumped, especially for the raw ingredients behind snacks like KitKat and coffee brands like Nescafe. Cocoa and coffee prices shot up, making it more expensive to make popular products just as they’re ramping up production at new factories—driving up fixed costs, too.

To cover those higher expenses, the company took short-term loans from commercial banks, pushing up its interest payments. These factors teamed up to drag profits well below what experts expected. There were some bright spots, though—prices for edible oil and cocoa finally appear to be settling, coffee is even getting cheaper, and milk, a key input, is only climbing slightly after months of volatility. But it’s cold comfort for investors hoping for a quicker recovery in Nestle’s profit margins.

On the leadership front, the board approved a big change coming next year. Suresh Narayanan will retire after July 2025, and Manish Tiwary will take over as Chairman and Managing Director from August 2025. Tiwary’s got the job of steering Nestle through cost turbulence, a changing consumer market, and the challenge of rebuilding confidence now shaken by this quarter’s results.

Market watchers say while the bonus issue caused some momentary confusion, it’s the underlying numbers that are weighing on the stock. Rising input costs and bigger bills for new manufacturing capacity aren’t problems that vanish overnight. Until Nestle can get a tighter grip on its costs, investors might want to buckle up for more price swings ahead.